Software Licensing

Most license agreements include limitations on copying disks, installing software, and transferring programs to other users. License agreements are contracts between the user and copyright owner. Many software companies offer site licenses or special licenses for companies, schools or government institutions. Most commercially marketed software is copyrighted, so it can’t be legally duplicated for distribution to others. (Beekman, Computer Confluence, Prentice Hall, 2001)


Here's an interesting but little-known fact: when you buy software, you're not buying the software itself. You're buying permission to use the software. The copyright holder still owns the software (that's right, the stuff you copy onto your hard drive isn't yours). The permission you buy is called a license (like a hunting license or a driver’s license) and is defined by a license agreement that comes with the software. Usually the license agreement is printed in tiny type on the back of the box or on a piece of paper shrink-wrapped with the box. Most people never read it, since it's full of legalese that usually takes a magnifying glass to see clearly. Most of us have seen the sticker on the box, however, that says something like, "Breaking this seal means you agree to the terms of the license."


Although licenses vary widely in content, there are five general kinds as far as copyright protection goes: public domain, freeware, shareware, open source, and "all rights reserved." Whenever you read the word "software" you should understand that really means "software and data"; all the copyright protection that applies to software applies to computer data and information as well.


    Public domain. Public domain software is not protected by copyright law; it is software that was either created with public funds (and is therefore already owned by the public) or the creator has forfeited these rights to the public. Since content is automatically copyrighted when put in tangible form, a creator must make special arrangements to add it to the public domain. The copyright on content can also expire and become public domain. No software is old enough for that to have happened, but it is very common in books and music. Disney recently successfully lobbied Congress to change the time a copyrighted work retains its copyright from 75 years to 95 years since its copyright on Mickey Mouse was about to expire, so Mickey would have become public domain.

    Freeware license. Freeware is copyrighted software that is licensed to be copied and distributed without charge. Some freeware (PGP, AVG, Internet Explorer, etc.) is really good stuff, but it's not in the public domain. That is, freeware is free to use, but the software is still under the owner's control. Thus, most freeware licenses prohibit the sale or modification of the software without the owner's permission, and they often limit the groups that are able to get the software without paying. Often the software will be free for individual or educational use, but requires payment for use in a commercial environment.

    Shareware license. Shareware is similar to freeware, in terms of distribution and installation of the software, except that the owner stipulates a purchase fee for permanent use. That is, the software is licensed for copying and sharing without charge, but only for evaluation purposes. Anyone who decides to use the software long-term is to pay a specified fee to the owner. There is usually no official system for collecting these fees; users are expected to pay on their own (honor system) in exchange for documentation, a more powerful version of the software, no more registration reminders, or some other enticement. More and more shareware is programmed to turn itself off after a certain period of time (30 or 90 days are typical) unless the owner buys a special activation code from the copyright owner. Much of the “free” software in the world is actually shareware.

    Open Source or Free Software. Free and Open Source software refers to the availability of source code. The software may be sold, so it may or may not be available at no cost. By providing the source code and stipulating that it remain open, programmers can add functionality and features to the software they purchase and even resell it, but they must provide the source code with their changes so that others may have the same access they did to change the source code. Some examples of Open Source software include Apache, Linux, OpenOffice, and PHP.

    Software license with all rights reserved. Software with all rights reserved is licensed only for use by purchasers. Almost all the really good stuff (Word, Oracle, PhotoShop, Windows XP, etc.) is licensed this way, and its owners typically reserve all the rights given them under copyright law; you can't legally use it or even possess it without the owner's permission. This permission is usually defined very carefully in the license agreement. Although license agreements vary widely in content, a typical license agreement for software with all rights reserved has items like these in it:

    • You can install and operate the software on only one PC at a time.
    • You can make only one back-up copy of the software.
    • If you give the software to anyone, you also give up permission to use the software.
    • You are not to modify the software in any way.
    • The software is not represented as fit for any particular purpose. (Yep—even if the box says "Do your taxes faster than ever," you cannot legally assume the software is fit for doing your taxes). This is to keep you from suing the company if their software wrecks your life.

Note that various state laws invalidate some of these provisions under certain circumstances, but usually they’re binding. Do any of them pique your interest? You might find it worthwhile to read a license agreement sometime just to see what you actually bought.


Software piracy is simply the illegal copying of software. The estimated loss due to piracy is approximately $39 billion per year globally. Conviction on the first offense can result in a fine of up to $250,000 and a jail sentence of up to five years. (Bowyer, Ethics & Computing, 1996)


SCENARIO: A student is working on a class assignment. The student doesn’t have the specific software used at school, so she asks her teacher to let her take of the copy of the software home. Is this ethical?


SOLUTION: Since the software is licensed to the school, this is not legal or ethical.


Not only can software be misused, but also ethics and laws can be breeched when the information made available to us because of the invention of the computer is used in ways that are in violation of those ethics and laws attached to it.